Life Time Fitness Shares Up 8% On REIT Conversion Plan

By Michael Aneiro

Another company whose core business doesn’t immediately conjure thoughts of real estate has found a way to boost its share price with a plan to convert some of its assets into a real-estate investment trust. Life Time Fitness (LTM), which operates a variety of recreation and fitness facilities, announced this morning that it’s exploring a potential REIT conversion for its real estate assets, sending LTM shares up 8.4% at latest check.

“Based on a review of several strategic alternatives, the Company’s board of directors believes that a REIT conversion could provide substantial benefits to the Company and its shareholders given its significant real estate holdings, while also supporting ongoing efforts to deliver innovative consumer and corporate health and wellness solutions as it executes its long-term growth plans,” the company said in a statement.

Recently Windstream Inc. (WIN) sent telecom investors into a frenzy after it got IRS approval to reclassify its communication lines as real estate and spin them off into a REIT. That sent WIN shares surging and prompted rampant speculation about which other telecom companies might follow its lead, boosting other telecom stocks as well. These REIT transactions can unlock value in a company’s underlying real-estate assets and can create some nice new income-paying securities in the process, but bear in mind that companies usually undertake these deals to save on their own tax bill, not necessarily do what’s best for investors.

LTM said Wells Fargo Securities and Guggenheim Securities are serving as its financial advisors, while Skadden, Arps, Slate, Meagher & Flom LLP and Faegre Baker Daniels LLP are serving as its legal advisors.